A Green Strategy for Success
in the Midst of Recession

Under the steady guidance of third generation owner Chip Spellman, Phoenix's Spellman Hardwoods expands its market reach by becoming FSC Chain of Custody Certified, and by establishing its name in sustainable surfaces.
Back when John F. Kennedy was president, Spellman Hardwoods was strictly about forest products. Period. But a lot has changed since then, says Chip Spellman, the third generation owner of this Phoenix based business. 

“We are diversified, so we aren't just hardwood lumber and plywood now; we have all these other decorative products that allow us to hit different segments of the market,” says Chip Spellman. “That's helped us, definitely, to maintain sales in a down market.”

Chip began working at Spellman Hardwoods during his junior high days. After college he moved into the sales department, and he became company president in 1994. 

Back then, the company's primary clientele was high-end cabinet shops and door makers. Chip Spellman began charting a steady course towards expansion – in the mix of product lines, in the types of customers served, and in the variety of value-added services offered.  “The biggest thing we've done is expand into the architectural field with decorative products such as CaesarStone, Avonite, Plyboo, Richlite, our decorative metals,” he said. “That has added a whole new dimension to what we do, opening us up for more commercial jobs. Plus, dealing with fabricators has given us a much bigger customer base. And the architects have simply been a huge addition for us.”

Dealing directly with architectural firms has allowed Spellman to get in on the front end of jobs, rather than on the back end. The company now offers an architectural rep who advises the design community about new options in decorative products, with the aim of getting those products speced into commercial jobs. “We have some key products today which get you in the door; once you're in, you can talk up your other products,” said Spellman. “You always want to start out with the ‘Wow' products, and then you can talk about your low-end laminates, your solid surfaces, your metals, or whatnot.” 

When their rep determines that one or more of their products has been speced, the company follows up by monitoring which builder or contractor will be getting the job, and then takes the next step of making sure Spellman gets the final sale. 

While new business from architectural market is a good thing, Spellman didn't leave his old friends behind. “We're dealing with the same kind of customer base as before, but we've added more products so there is more we can sell to those customers,” said Chip. “So we didn't totally branch out; we're still dealing in the nuts and bolts of things.” 

To make room for their expanded product offerings, Chip moved the company moved into an 8 acre campus with 144,000 square feet of covered storage. There's also a 25,000 square foot mill facility equipped with custom molders, planers, gang rips, re-saws. “We do a lot of value added with lumber,” says Spellman. 

In addition, the company maintains a 30,000 square foot building at their satellite location in Flagstaff to service the Northern Arizona construction and remodeling market. It all keeps the staff of 45 busy during a construction slump that has many competitors reeling. 
Still, Spellman sees signs that the economy may be turning around. “I think we've hit bottom out here in Arizona, and there is a bit of optimism. We still have a ton of foreclosures, and the prices for housing has dropped so low that it's keeping a lot of new residential projects from starting up,” he observed. “There are still things happening in the commercial market, but we aren't seeing a lot of big projects.”
Those big projects have often been green, and Spellman is ready with a very wide assortment of material that can help projects achieve LEED certification. “Locally, I've been seeing a big pickup on projects that want FSC certified and NAUF materials,” said Spellman. “It has become a big factor because we have been carrying a lot of inventory that's FSC certified, and if you have it you will sell it. If you don't have it, you don't get the sale. A lot of guys are running lean in these down markets, where we've decided to maintain a pretty good sized inventory.”

One builder who hasn't slowed down in the recession is the federal government. “We have a customer who does a lot of forts, and a lot of the product going into those kinds of project is green, including a lot of NAUF hardwood plywood, and a little bit of lumber,” said Chip. “They're looking for it to be FSC certified, so that's been good for us.” Much of Spellman's FSC and NAUF material is sourced from The Collins Company. 

And Spellman was glad to point out other pending green projects. “There's a border patrol station going up which will be using green products,” he said. “We're looking at a big project with Plyboo, which is obviously a green project. And we've had some university projects that used green products.” 

Another recession-proof builder is the health-care industry. “Medical is big for us; we have put a lot of panels and solid surface material into hospitals,” he said. “There are a few hospitals going up in the area right now. I see us getting more of that business as time goes on, particularly as the population increases in the outskirts.”

Spellman's growing reputation as a serious source for green products is not limited to their home state.  “We have been involved in many projects in Las Vegas,” Spellman told us, “including two towers of the MGM Grand Hotel. We didn't even have to deliver; they picked up the materials from our warehouse.”
Green decorative products have definitely opened the door for wider sales opportunities with some big clients. “People want to see something different, especially the architects,” he noted. “One of our hottest products have been CaesarStone. We just took on PlyBoo and we already have a big project coming up for 400-500 sheets of it. We took Richlite on maybe 8 months ago and we just sold a $100,000 order, so it's been more than okay. And we've done some high-end fancy veneers,” he listed. 

It all amounts to a substantial addition to their existing mix of hardwood and softwood lumber. “It lets us go in and talk to an architect because we have more to talk about. Instead or just one product, we can sell them five or six. It also gives them more reasons to see us, and that has been helpful.”

Decorative surfaces have also been a plus with the smaller operators. “It definitely opened that door, especially with things like high pressure laminates and metal laminates where guys are buying onesies and twosies,” Spellman said. “It's allowed us to reach out to that portion the market sell to a lot more of the smaller guys.” Spellman Hardwoods has focused on product lines that translate easily to LEED credits. Brands such as Avonite and Pionite HPL are Greenguard certified, and other offerings such as Chemetal qualify because of a high recycled content.
In today's competitive lumber market, value added is the key to closing the sale. “People can buy boards anywhere, so you need to be selling more than a simple piece of lumber or plywood,” said Spellman. “We do moldings, we've started to do glue-ups, we do butcher block, we do panels, and we do door fronts,” he told us. “In this down market, we have expanded in terms of getting more machinery. We got some very good deals on equipment. We brought in a computerized, Mereen-Johnson gang rip saw with removable saw blades, and we got a great deal on it. It replaced 3 guys and two machines.

In recent years, the most in-demand wood species at Spellman Hardwoods has been alder, followed by poplar and cherry. That's been true for cabinetry, doors, trim, and furniture. For more exotic tastes, Spellman keeps 10 to 12 varieties of tropical woods in stock: African mahogany, sapele, afromosia, teak, sipo have been the most popular of late. 

Looking to the future, Chip Spellman expects a major part of its success to continue flowing from its selection of green products. After all, Arizona's architectural market is going green, and Spellman Hardwoods has already positioned itself as one of its leading suppliers.

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